2024-01-19 09:09

UK Retail Sales, GBP/USD Analysis UK retail sales contracts at fastest monthly rate since the Covid affected period of January 2021 Choppy GBP/USD price action remains undeterred – highlighting key horizontal levels Bank of England rate decision presents the next major event risk on the horizon Take a look at our brand new Pound Sterling Q1 forecast below: UK retail sales fell 2.4% in December 2023 when compared to the same month in 2022, led by notable declines in both food and non-food store volumes as consumers feel the effect of higher interest rates. Non-store retailers (mainly online retailers) also witnessed a drop in sales volumes by 2.1%, but unlike the above-mentioned segments, online stores came off a 1.1% drop in November. December’s decrease was the largest monthly fall since January 2021 when covid restrictions affected sales. GBP/USD Immediate Response Sterling lost a bit of ground early this morning in the wake of the report, dropping around 30 pips over a 90 minute period. GBP/USD 5-Minute Chart Source: TradingView, prepared by Richard Snow Choppy GBP/USD Price Action Remains Undeterred GBP/USD has developed even further into this trend of sideways price action, although, the peak and trough provide a decent bit of mileage to work with. Picking a direction in the pair has therefore been difficult, with a more prudent approach to consider entries near key horizontal levels that have thus far contained the majority of price action since mid-December. The two major levels here are 1.2794 and 1.2585. The most recent move came after the UK employment rate held steady but more importantly UK inflation ticked higher. A lift in inflation has been seen in the UK, US and EU but appears to have aided sterling recently. GBP/USD tested the underside of the trading range at 1.2585 before the economic data provided a boost, seeing the pair above both the 50 and 200-day simple moving averages (SMA). Continued bullish momentum appears like a major challenge as the US dollar has regained some lost ground after treasury yields successfully halted prior declines this week. Fading upside momentum is rather notable on the MACD indicator, revealing a steady decline. With all of this considered, range trading remains a prudent approach – underscoring the importance of key horizontal levels and relative effectiveness of economic data to provide a catalyst in one direction or another. The next major event is the Bank of England rate decision in the 1st of February. GBP/USD Daily Chart Source: TradingView, prepared by Richard Snow https://www.dailyfx.com/news/pound-sterling-latest-uk-retail-sales-contracted-in-december-gbp-usd-drops-20240119.html

2024-01-18 18:00

US DOLLAR FORECAST – USD/CAD. AUD/USD The U.S. dollar has rebounded recently, as traders have scaled back overly dovish interest-rate cut expectations Current market dynamics may have room to consolidate in the near term This article focuses on the technical outlook for USD/CAD and AUD/USD Most Read: US Dollar Shines Bright on Strong Data; Setups on Gold, EUR/USD, USD/JPY The US dollar has staged a solid rebound recently as traders have scaled back bets on how much the Fed will slash borrowing costs in 2024. A couple of weeks ago, markets were largely convinced that the U.S. central bank would deliver more than 160 basis points of easing this year, but those expectations have since moderated sharply. The odds that the FOMC will start its rate-cutting cycle in March have also diminished, boosting greenback’s bullish reversal along the way. Given that the Fed's monetary policy outlook, as assessed by Wall Street, remains overly dovish and inconsistent with the strength of the economy, wagers on deep rate cuts could continue to unwind, paving the way for recent moves to extend. This could possibly result in additional gains for the U.S. dollar in the near term. With this in mind, this article will explore the technical outlook for USD/CAD and AUD/USD, analyzing important price thresholds that should be on every trader's radar in the coming days and weeks. USD/CAD TECHNICAL ANALYSIS USD/CAD has rallied vigorously since 2023, clearing critical technical thresholds in the process, including its 200-day simple moving average. After its recent climb, the pair has reached the gates of a key resistance near 1.3540, where a short-term downtrend line aligns with the 50% Fib retracement of the Nov/Dec slump. Bears must defend this area at all costs; failure to do so could result in a move towards 1.3570, followed by 1.3625. In the event a bearish reversal off current levels, initial support appears at 1.3480. Although prices may find stability in this zone during a pullback, a decisive breakdown could prompt a swift retrenchment towards 1.3385. USD/CAD TECHNICAL CHART USD/CAD Chart Created Using TradingView Unsure about the Australian dollar’s trend? Gain clarity with our complimentary Q1 trading forecast! AUD/USD TECHNICAL ANALYSIS AUD/USD sold off from late December through early this week, but has begun to stabilize after finding support near 0.6525, an important level slightly above the 100-day simple moving average. If the nascent rebound starts to gain traction, resistance emerges at 0.6570-0.6580, followed by 0.6650. On further strength, the bulls may launch an attack on the 0.6700 handle. On the flip side, if sellers return and push prices below the 100-day SMA, the next line of defense against a bearish assault appears at 0.6500, which corresponds to the 61.8% Fibonacci retracement of the Oct/Dec rally. It is vital for this technical floor to hold, as a breakdown could usher in a descent towards 0.6460. AUD/USD TECHNICAL CHART AUD/USD Chart Created Using TradingView https://www.dailyfx.com/news/forex-usd-dollar-stands-tall-technical-setups-on-usd-cad-and-aud-usd-20240118.html

2024-01-18 16:00

USD/JPY Analysis and Charts USD/JPY ticked up in Asia, but pared gains in Europe Market interest-rate rethinks for the Bank of Japan and the Federal Reserve favor more Dollar gains Japanese inflation data may have prompted some caution The Japanese Yen managed some rare gains against the United States Dollar in Thursday’s Asian session. However, it retraced most of them through the European afternoon and the fundamental backdrop remains greatly in the Dollar’s favor. Indeed USD/JPY soared above its 100-day moving average this week, to reach highs not seen since late November, having risen steadily and impressively into 2024. The rationale for this is easy enough to pin down and, unsurprisingly, has its roots in monetary policy expectations. The foreign exchange market was pretty sure last month that the US Federal Reserve would fire the starting gun on interest rate cuts in the first three months of this year. However, this chance has been significantly repriced, with the odds of a cut in March now no better than 50%. They were briefly above 80% as the old year bowed out. The US economy has proven more resilient than many expected and, while inflation has surely come down, it remains well above target and that accounts for the latest repricing. Crucially for USD/JPY, the market may well have gotten a bit ahead of itself when it comes to the Bank of Japan too. The BoJ had been widely expected to finally walk back the longest period of ultra-loose monetary policy in its (or anyone else’s) history this year. However, with Japanese inflation trending lower again, and clear uncertainty as to whether the domestic demand so desired by the BoJ has ignited, it seems unlikely that this walk-back is coming anytime soon. The devastating earthquake Japan experienced earlier this month has probably also moved any thoughts of tighter credit off the table. So why might the Yen have ticked up? Well, the market is looking to Japanese December inflation data, due long after the European close. The annualized rate is expected to have ticked down to 2.3%. Should it do so, inflation would be back down to levels not seen since mid-2022, which would tend to undermine the Yen, However, given the current focus on Japan’s likely monetary path, it’s perhaps likely that the market should pause the release, giving the Japanese currency some respite. USD/JPY Technical Analysis USD/JPY Daily Chart Compiled Using TradingView The Dollar crossed back above its 100-day moving average against the Yen on Wednesday when it topped 147.32, with that level now providing some near-term support. For now the broad uptrend channel in place since the market bounced on January 3 remains well-respected and offers resistance quite close to the current market at 148.86. A break above this looks rather doubtful given that the Dollar is starting to look a little overbought at current levels. With the pair’s Relative Strength Index closing in on the 70.0 level which would indicate significant overbuying, any near-term forays above that channel top should probably be viewed with caution. Fundamental momentum is likely to favor the Dollar over time though, and last year’s peak of 151.85 will probably be back in the bulls’ sights if no significant retracement is seen into month end. That peak was hit in November. Reversals below the 147.00 psychological support are likely to find a near-term prop below it at 146.60. That’s the first Fibonacci retracement level of the rise up to that November top from the lows of last March. IG’s own sentiment data finds traders strongly short of USD/JPY at current levels, although to such a great extent (70%) that a shift in favor of more Dollar gains looks likely. --By David Cottle for DailyFX https://www.dailyfx.com/news/yen-scores-small-nervous-gains-on-us-dollar-in-wait-for-japan-cpi-20240118.html

2024-01-18 14:08

Euro (EUR/USD, EUR/GBP, EUR/JPY) Analysis EUR/USD bearish continuation underway as the dollar hits its stride EUR/GBP shows early signs of longer-term bearish continuation EUR/JPY takes advantage of a depreciating yen The analysis in this article makes use of chart patterns and key support and resistance levels. For more information visit our comprehensive education library ECB Minutes Stress Progress on Wages a Prerequisite for 2% Target The ECB minutes relating to the mid-December ECB meeting continued to warn against complacency as sticky price pressures can jeopardise reaching the 2% target before 2026. One of the chief concerns for the ECB has emerged via wages and the prospect of labour unions lobbying for higher wages in 2024 after seeing declines in real wages in 2022 and 2023. Higher labour costs run the risk that firms pass on the increased expense to the end consumer, potentially stoking price pressures further. The chart below portrays how inflation has been outpacing wage growth in Europe but the gap is becoming smaller as disinflation takes hold and nominal wages have been on the rise. The ECB minutes also revealed that some Governing Council members preferred to end full reinvestments of PEPP (the central bank’s version of QE) earlier than agreed but otherwise consensus was achieved among the group. EU Wage Growth vs Inflation Source: Refinitiv, LSEG, prepared by Richard Snow EUR/USD Bearish Continuation Underway as the Dollar Hits its Stride Better-than-expected US retail sales and the global uptick in inflation has necessitated adjustments to the timing and magnitude of expected interest rate cuts this year. With markets having tapered aggressive rate cut expectations, the dollar emerged as one of the standout beneficiaries, weighing on EUR/USD. On Tuesday, the pair broke out of what was a frustrating period of consolidation, trading below the 50-day SMA. Today, the pair now tests the 200-day simple moving average (SMA), followed closely by 1.0831. Momentum appears to favour the downside when observing the MACD indicator. Stagnant growth in Europe continues to weigh on the Euro while the US economy remains relatively well positioned in this regard but growth is expected to ease further. EUR/USD Daily Chart Source: TradingView, prepared by Richard Snow EUR/GBP Shows Early Signs of Longer-Term Bearish Continuation EUR/GBP on the daily chart reveals a desire to trade lower after breaking out of the narrowing triangle pattern, currently testing 0.8565, with 0.8515 the next significant level of support. Previous guidance looked to the more prominent dotted line at 0.8635 for signs of bullish intent – something that has not been confirmed and in fact, prices are notably lower since. Recent, elevated UK inflation data has helped prop up the value of sterling which provided the main catalyst for the move to the downside in EUR/GBP. Prices continue to trade below the 50 and 200-day SMA, something that is typically observed in down trending markets. EUR/GBP Daily Chart Source: TradingView, prepared by Richard Snow The weekly EUR/GBP chart currently holds its triangle pattern but trendline support has come under pressure this week. Taking a zoomed out look at the pair, the 0.8472 marker provides a possible level of interest if a bearish move were to extend over the medium-term. EUR/GBP Weekly Chart Source: TradingView, prepared by Richard Snow EUR/JPY Takes Advantage of a Depreciating Yen EUR/JPY unlike the prior two chart setups, reveals bullish momentum. The pair trades slightly lower today but price action in the first month of the year has revealed great bullish potential. While prices are lower today thus far, prior pullbacks in 2024 had proven to be short-lived, setting up the potential for a move towards 164.31 – the prior swing high in November of last year. The RSI is getting close to breaching overbought territory meaning it may be prudent to wait for a pullback followed by more upward momentum before considering bullish EUR/JPY plays GBP/JPY Weekly Chart Source: TradingView, prepared by Richard Snow https://www.dailyfx.com/news/ecb-minutes-shift-focus-to-wages-eur-usd-eur-gbp-eur-jpy-setups-20240118.html

2024-01-18 12:30

Gold and Silver Analysis and Charts Central bankers pouring cold water on inflated rate cut expectations. Silver eyes a fresh multi-week low. Most Read: Gold Price (XAU/USD) Slipping Lower but Support Should Hold for Now Federal Reserve and European Central Bank board members have been on the wires this week trying to temper market rate cut enthusiasm. While the firm expectation is that both central banks will cut interest rates this year, as inflation moves back towards target, the speed and amount of cuts the markets have been pricing in are at odds with the Fed and the ECB. Last week, CME FedFund expectations were pricing in seven quarter-point interest rate cuts in the US this year, starting in March. These expectations have now been pared back to six cuts, and some of these are now starting to look questionable. Gold has struggled against this central bank headwind and is sitting on a prior level of resistance turned support at $2,009/oz. This week’s sell-off has driven the spot price through both the 20- and 50-day simple moving averages, adding to the negative tone. We noted in the article above that $2,009/oz. should hold a short-term sell-off and while this still stands, a further break lower cannot be ruled out. The next level of support at $2,000/oz. is followed by $1,987/oz. Ona longer-term basis, the chart remains positive as long as the last higher low at $1,973/oz. remains in place. Gold Daily Price Chart Chart via TradingView Retail trader data shows 67.93% of traders are net-long with the ratio of traders long to short at 2.12 to 1.The number of traders net-long is 21.05% higher than yesterday and 26.39% higher than last week, while the number of traders net-short is 6.88% lower than yesterday and 15.18% lower than last week. We typically take a contrarian view to crowd sentiment, and the fact traders are net-long suggests Gold prices may continue to fall. See how changes in IG Retail Trader data can affect sentiment and price action. The daily silver chart looks weak with XAG/USD close to posting a fresh multi-week low. The recent series of higher lows and higher highs has been broken and further losses cannot be ruled out. The spot price is below all three simple moving averages and the 20-dsma is now below the 200-dsma, highlighting the market's current weakness. Silver Price Daily Chart Chart via TradingView What is your view on Gold and Silver – bullish or bearish?? You can let us know via the form at the end of this piece or you can contact the author via Twitter @nickcawley1. https://www.dailyfx.com/news/gold-and-silver-under-pressure-from-pared-back-interest-rate-cut-expectations-20240118.html

2024-01-18 09:01

Pound Sterling (GBP/USD, GBP/JPY) Analysis GBP/USD looks to retain hard-fought gains as USD holds firm 2-year Gilt yields open slightly lower but remain around yesterday’s high GBP/JPY has ambitious target in sight ahead of Japanese CPI data Yesterday UK CPI beat estimates both on the headline and core measures, resulting in downward revisions for interest rate expectations which supported the pound. Stubborn inflation has proven not to be a UK specific problem but has indeed been witnessed in the EU and the US as well. That’s not to say inflation is now set to trend higher. It’s quite the opposite. Disinflation (prices increasing at a decreasing rate) is likely to continue as long as the Bank of England (BoE) can get a handle on hot services inflation. In yesterday’s CPI print, the major contributor towards the higher reading was the increase in tobacco prices which stemmed from the higher rate of tax it now attracts after Jeremy Hunt’s Autumn Statement. Therefore, lingering price pressures are seen to be shorter-term in nature as the general price trend continues to ease lower. GBP/USD Looks to Retain Hard-Fought Gains as USD Holds Firm Early this morning cable trades slightly higher as the pair attempts to push higher towards 1.2736 but a robust U.S. dollar may pose a challenge to further upside. The dollar benefited from a better-than-expected US retail sales print for the month of December, and when this is viewed alongside stickier US inflation during the same period it won't be unusual to see the dollar recover more ground. GBP/USD appears to have settled into a choppy, sideways trading pattern since mid-December. The underside of the sideways channel comes in at 1.2585 and the upper bound appears at 1.2794, with current price action trading roughly in the middle of these two levels. GBP/USD Daily Chart Source: TradingView, prepared by Richard Snow Naturally, two year Gilt yields rose on the news of stickier inflation over December and today we're seeing a slight easing in early morning trade during the London session which could undermine the recent lift in the pound. UK 2-Year Yield (GILT) Source: TradingView, prepared by Richard Snow GBP/JPY Has Ambitious Target in Sight Ahead of Japanese CPI GBP/JPY continued its bullish advance yesterday however is also trading slightly lower this morning. recent price action reveals pull backs to be short lived, followed imminently by bullish momentum. The pair now sees 188.80 as the next level of resistance but keeping in line with the prior observations it would be reasonable to suspect a brief pullback in the interim. the yen has come under pressure in recent weeks as wage growth and inflation data have shown signs of easing, allowing the Bank of Japan more breathing room before deciding on a massive policy change (normalisation). GBP/JPY Daily Chart Source: TradingView, prepared by Richard Snow https://www.dailyfx.com/news/sterling-attempts-to-build-on-yesterday-s-advance-as-data-schedule-cools-20240118.html